Section 3

THE SELECTION OF THE

CIVIL ENGINEER
 3.1 GENERAL
The Selection and engagement of
a Civil Engineer is one of the most
important decisions to be made during
the development of an engineering
project.
This section presents what
experience has shown to be the best
and, therefore, the recommended
procedure for the engagement of the
Civil Engineer. 2
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3.2 BASIS FOR SELECTION
The client should establish Factors that should be
administrative policy and criteria for the considered:
selection of qualified Civil Engineers for • The professional and ethical reputation
of the Civil Engineer and his staff as
particular projects. The client’s first step is to determined by inquiries to previous
define the proposed scope of the project. By clients and other references.
• Responsible Civil Engineers and its
clearly defining the services which the Civil
employee and must be registered
Engineer is to furnish, the client can accurately professional Civil Engineers.
judge whether or not the Civil Engineer is best • Civil Engineers should have
demonstrated qualifications and
equipped to provide them. expertise, performing the services
required for the project.
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3.2 BASIS FOR SELECTION
The client should establish Factors that should be
administrative policy and criteria for the considered:
selection of qualified Civil Engineers for • Civil Engineer should be able to assign
qualified engineering staff who will be in
particular projects. The client’s first step is to responsible charge of the project and
define the proposed scope of the project. By will be able to provide and complete the
required services within the time
clearly defining the services which the Civil allotted.
Engineer is to furnish, the client can accurately • The Civil Engineer should have the
necessary financial and business
judge whether or not the Civil Engineer is best
resources to accomplish the assignment
equipped to provide them. and provide continuing service.

4
 3.3 Client’s Selection Committee
Within the client’s organization there should be an
established administrative policy for designating the persons
authorized to select or recommend selection of Civil Engineers
for specific assignments.

One satisfactory procedure is to utilize a selection

committee of three or more individuals, at least one of whom is
a professional engineer of the appropriate discipline.

5
3.4 Qualification-Based
Selection (QBS Procedure)
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Usual steps in the Selection Procedure:

1. By invitation or by public notice, state the
general nature of the project, the services
required, and request statements of
qualifications and experience from Civil
Engineers who appear to be capable of
meeting the project requirements.

2. Prepare a budget for the staff time and costs

that can be expected from potential Civil
Engineer prior to receipt of the RFQs or RPSs.

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Usual steps in the
Selection Procedure:
3. Evaluate the statements of qualifications
received. Select at least three Civil Engineers or
firms that may appear to be best qualified for
the specific project.

4. Write a letter to each Civil Engineer or selected

for further consideration describing the
proposed project in detail, including a project
scope and outline of services required, and
asking for a proposal describing in detail the Civil
Engineer’s plan for managing and performing
required services, the personnel to be assigned,
the proposed schedule, experience with similar
projects, etc.
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Usual steps in the Selection Procedure:

5. On receipt of proposals, invite the Civil
Engineers or firms to meet individually with
the selection committee for interviews and
discussions of the desired end results of the
project and the engineering services required.

6. Check with recent clients of each Civil

Engineer or firm to determine the quality of
their performance. This check need not to be
limited to references listed by the Civil
Engineer.
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Usual steps in the
Selection Procedure:
7. List the Civil Engineer or firms in the order of
preference, taking into account their approach
and understanding of the project, reputation,
experience, financial standing, size, personnel
available, quality of references, workload,
location, and other factors pertinent to the
project being considered.

8. Invite the Civil Engineer considered to be best

qualified to develop a detailed scope. List of
deliverables and schedule, and to negotiate fair
compensation for the services.

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Usual steps in the Selection Procedure:

9. The compensation proposed by the Civil
Engineer should be evaluated on the basis of
the clients experience and budget estimate,
taking account of the range of charges
reported in Section 4 herein; giving
consideration to the project’s special
characteristics and the scope of services
agreed upon. Fair and reasonable
compensation to the Civil Engineer is vital to
the success of the project since it will enable
the consultant’s expertise to be fully utilized.

11
Usual steps in the
Selection Procedure:
10. If satisfactory agreement is not reached with the
first Civil Engineer, the negotiations should be
terminated and the Civil Engineer or firm be
notified in writing to that effect. If no accord is
reached, the client should seek outside
assistance before continuing with the selection
process. All such negotiations should be on a
strictly confidential basis, and in no case should
the compensation discussed with one Civil
Engineer be disclosed to another.
11. When agreement has been reached on scope,
schedule and compensation, the client and
selected Civil Engineer should formalize their
agreement in a written contract.
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Selection Procedure for “Level of Effort” FR
Contacts

LEVEL OF EFFORT

Type of contract for engineering services is a

contract procedure used to supplement a client staff,
either by providing an extension to existing disciplines
and capabilities already on board or by adding special
disciplines not available on the client’s staff.
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3.5.1 BIDDING
Professional engineering and architectural societies,
recognize QBS as the preferred method for procurement of
professional services. In fact the NEDA Guidelines require the
procurement of professional engineering and architectural
services only by a process similar to that described in
Qualifications-Based Selection Procedure.

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Principal reasons why bidding often produces
unsatisfactory results for the client.

• Bidding does not recognize professional judgment, which is the key

difference between professional services and the furnishing of
products.
• It is virtually impossible to completely detail in advance the scope of
services required for an engineering project especially for the study
and preliminary phases, without lengthy discussions and negotiations
with the selected firm.
• In-depth studies and analyses by the consulting Civil Engineer are not
likely to be performed. The consulting Civil Engineer selected by
lowest bid will often provide only the minimum services necessary to
satisfy the client’s scope of services.

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 FR
Principal reasons why bidding often produces
unsatisfactory results for the client.

• The consulting Civil Engineer’s ability to be flexible and creative in

meeting the client’s requirements is severely limited.

• The engineering designs are likely to be minimal in completeness with

the details left to the contractor. This produces a lower first cost
design but tends to add to the cost of the completed project. The lack
of design-details also can and frequently does, lead to a greater
number of change orders during construction and to contractor
claims at a later date.

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 FR

3.5.2 TWO -ENVELOPE SYSTEM

The two-envelope system involves submission of a
technical proposal in one envelope and a price proposal in a
second envelope.

The client then evaluates the technical proposals and

select the best qualified Civil Engineer based on that consulting
Civil Engineer’s technical proposal.

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Thank You! ^_^
CHARGING FOR CIVIL
ENGINEERING SERVICES
SECTION 4 : MANUAL OF PROFESSIONAL PRACTICE FOR CIVIL ENGINEERS
BY PICE.
GENERAL:
Charging for engineering services are usually
computed by 1 of 6 methods:
1.Salary cost times multiplier plus direct plus
direct non-salary expense (Reimbursable )
2. Hourly billing rates plus reimbursable.
3. Per diem
4. Cost plus fixed fee (CPFF)
5. Fixed price
6.Percentage of construction cost
(“Percentage”)
Combination of methods of payment for different phases
of the contract may be used. The method or combination
of methods used depends upon the nature, scope, and
complexity of services required by the client.

When the client may wish the Civil Engineer to undertake

a project characterized by an accelerated schedule, non-
routine services, and/or high risk activities. Under these
circumstances charges for engineering services may be
based on “value pricing, which reflects a premium rate
not tied directly to the Civil Engineer’s Cost, but based on
the Civil Engineers unique qualifications or the
extenuating circumstances.
1. Salary cost times multiplier plus
direct plus direct non-salary expense.
• Compensation on the basis of the salary cost times
an agreed multiplier is a frequently used method of
determining charges for engineering services. With
this method, charges for engineering services are
based mainly on direct salaries. It is therefore
advisable that the Civil Engineer reach an
agreement with the client on salary ranges for
each classification of service applicable, as well as
on the time period over which they can be
guaranteed. This may help avoid future surprises,
misundertanding and disputes
• The salary cost times multiplier method may
be utilized as either a multiplier times salary
cost or a multiplier times direct salary cost.
• The direct salary times multiplier is very
similar to the salary cost times multiplier with
the exception that it applies a single multiplier
to unburdened direct labor cost, i.e.,
The following factor are pertinent to the salary
cost times multiplier version of this method:
1. Salary cost
Defined as “direct salaries plus employee
benefits” and includes salaries for partners or
principals and for technical, professional,
administrative and clerical staff directly”.
Chargeable to the project: sick leave, sick
leave, vacation, holiday and incentive pay;
unemployment and other payroll taxes; and
he contributes for social security, workers
compensation insurance retirement, medical
and other group benefits
2. Multiplier
• Which is applied to salary cost is a factor
that compensates the Civil Engineer for
overhead (as defined hereinafter) plus a
reasonable margin contingencies, interest
or invested capital readiness to serve,
and profit.
• The multiplier will vary with the type of
service, the nature and experience of the
civil engineering firm, and the geographic
area in which its office is located.
• The average multiplier should be between 2.5
and 3.0 times the average salary cost.
However higher multiplier is usually applicable
for services requiring recommendations and
based on extensive experience and special
knowledge, or for services involving expert
testimony in legal proceedings. Multiplier may
also increase with the experience and special
capabilities of the Civil Engineer’s firm.
3. Direct non-salary expenses
Usually incurred in engineering
engagements may include the following:

a. Living and travelling expenses of principals and

employees when away from home office on
business connected project.

b. Identifiable communications expenses, such

as longs distance telephone, facsimile, telegraph,
shipping charges, and special postage charges
(for general correspondence).
c. Expenses for services and equipment directly
applicable to the project, such as the specialized
technical equipment, special legal and accounting
 Services, special computer rental and
programming services, computer run time and file
storage, CADD charges, sub consultants and
subcontractors, commercial printing and binding,
and similar services that are not applicable for
inclusion in general overhead.
d. Identifiable drafting supplies, stenographic
supplies, and reproduction work (blue printing,
photocopying, and printing charged to the
client’s project as distinguished) as distinguished
from such supplies and expenses applicable to
several projects.
4. The Civil Engineer’s overhead.
Which comprises a major portion of the
compensation generated by the multiplier on
salary cost, includes the following indirect costs:
a. Provisions for office expenses – light, heat, telephone,
depreciation, rental furniture, rent, drafting
equipment and engineering instruments,
transportation expenses, and office and drafting
supplies not identifiable to a specific project.
b. Taxes and insurance other than those included as
salary cost.
c. Library and periodical expenses and other costs of
keeping abreast of advances in engineering, such
as attendance at technical and professional
meetings and continuing education courses.
d. Executive, administrative, accounting, legal,
stenographic, and clerical salaries and expenses (
other than identifiable salaries included in the salary
costs and expenses) plus salaries or imputed salaries
of partners and principals to the extent that
they perform general executive and administrative
services and distinguished from technical or advisory
services directly applicable to particular
projects. These service and expenses, essential to
the conduct of the business, include preliminary
arrangements for new projects or assignments and
interest on borrowed capital.
e. Business development expenses, including
salaries of principals and employees so
engaged.

f. Provision for loss of productive time of technical

employees between assignments, and of principals
and employees on public service assignments.
g. Costs of acquiring and maintaining computers,
development software, and training staff when not
billed as direct cost.
5. Accounting records
The civil engineer who performs services
under salary cost times multiplier agreement or
other cost-based agreement must provide the
accounting necessary to segregate and record
the appropriate expenditures. Adequately
detailed hourly time records must be maintained
for principals, engineers and other employees
who devote time to the project.
II. HOURLY BILLING RATE:
This method of compensation is very similar to
the salary cost times multiplier method in that the
hourly billing rate includes all direct personnel
expense, overhead and profit. Direct non-salary
expenses (as defined under salary cost times
multiplier section) are a separate item for
reimbursement, usually with a service charge. Civil
engineering firms may elect utilize this method of
compensation on projects where the scope of
service is not well defined or to simplify accounting
and record keeping.
III. PER DIEM
Normally refers to an eight-hour day. Direct
personal services of the type described in the
previous chapter which frequently charged on a per
diem basis. This basis is particularly suited to expert
witness or other legal-type services and to other
short term engagements involving intermittent
personal services.
where per diem services are furnished, the
Civil Engineer should be compensated for all time
devoted to providing them, including travel and
stand by time. The per diem charge should be
based on the complexity, risk, and importance of
the services and on the Civil Engineer’s professional
And breadth of experience. The Civil Engineer is also
reimbursed for travel and subsistence costs and for
other out-of-pocket expenses incurred when away
from the home office.
For engagements in which the Civil Engineer
is to appear as expert, a per diem charge is
considered to be earned for each day of such
appearance, even though the Civil Engineer is
not called to testify, or if called, may finish
testifying in only part of the day.
on occasion the urgency of the
engagement requires the Civil engineer’s
time regularly for period longer than the
normal eight-hour day.
In such cases an understanding should be
reached with the client, and the per diem rate
increased accordingly.
Per diem rates can vary widely, depending on
employee classification, regional location, and
period of service. Rates for consultation in
connection with litigation and appearances
before commissions and courts are normally
higher than the standard rates.
III. COST PLUS FIXED
Under a cost plus fixed fee agreement, the Civil
Engineer is reimbursed for the actual costs of all
services and supplies related to the project,
including:
• Salary costs, as previously defined
• Overhead, as previously defined(The Civil
Engineer should be prepared to support the
basis for overhead charges.)
• Direct non-salary expenses, as previously
defined.
• Fixed fee, an amount to compensate the Civil
Engineer for contingencies, interest on invested
capital, readiness to serve, and profit.
The Cost plus fixed fee basis requires, as a
prerequisite to equitable negotiations, that the client
and the Civil Engineer define and agree upon the
scope of services the Civil Engineer is to perform.
Such definition of the scope of service is essential to
enable the Civil Engineer to estimate costs and
purpose an equitable fixed fee amount. The scope of
services, cost estimate, and fixed fee should be
incorporated into the client-engineer agreement.
The cost plus fixed fee method can also be used
when the Civil Engineer is required to start providing
service before the detailed scope of services can be
determined. In such cases, the following
considerations apply:

 The general scale and intent of the project

should e fairly well defined, even if the full
scope is indeterminate; for example, the
number, size, and character of building or
other facilities, the type of utilities, and other
such essential information should be
available.
  The type of service to be performed by the
Civil Engineer should be agreed upon and fully
set forth. The agreements should also provide
for appropriate adjustments in the fixed fee, in
the event of the physical scope of the project,
time of completion, or level of effort and
services required are materially changed over
those contemplated during negotiations.

One advantage of the cost plus fixed method is that

it eliminates any suspicion that the costs have been
allowed to grow in order to increase the Civil
Engineer’s fee, which by definition is a fixed amount.
IV. FIXED PRICE
This method of compensation is frequently
used for investigations and studies and for basic
services on design type projects where the scope
and complexity of the assignment of the
assignment are clearly and fully defined.
A fixed price agreement should contain a
clearly stated time period during which the
services will be performed and a provision for
adjustment of compensation if the project is
delayed for reasons beyond Civil Engineer’s
control. For design services, there should be
provision for changes required after approval of
the preliminary design, with a final approval
Partial payments should be made to the
Civil Engineer at stated intervals usually
once a month during the performance of
the services. These payments are usually
based on the Civil Engineer’s statement
of percent completion to date.
 V. PERCENTAGE OF CONSTRUCTION COST
This method is seldom used now, because of
increasing complexity and large variation in task for
projects, percentage of construction cost fee curves no
longer have a direct correlation to the required
engineering fees for specific projects. Owners should
either use experienced “in-house” staff or retain
consultants to develop detailed program budgets for
construction costs, right of way, legal, administrative,
engineering services and permits.
 Construction cost is defined as the estimated total
cost of constructing the facility to be covered by the
proposed detailed design or construction supervision
services, excluding the fees and other costs of such
services, the cost of land and right-of-way, and legal
and administrative expenses.
The validity of the percentage-of-construction-cost
methods rests upon assumption that detailed design
and construction supervision costs vary in proportion
to the cost of construction. When judiciously applied,
and with due consideration of the ranges within which
engineering scope may vary, this method is valuable
as a tool for general comparison with line-based fees
for design services.
The percentage fee shall consider the type,
complexity, location and magnitude of construction
cost of the project and shall not exceed the following
percentage estimated construction cost.
a. Feasibility studies – three percent (3%);
b. Detailed engineering design – six percent (6%);

c. Detailed architectural and engineering design –

eight percent (8%)
d. Construction supervision – ten percent (10%)
 VI. SCHEDULE OF MINIMUM BASIC FEES
Rates of compensation for Civil Engineers engaged
in various capacities are given in Appendix A.
The PICE shall regularly update schedule of fees
stipulated in the Appendix. Certain principles should
however be observed as follows.
1. When doing work on foreign assisted projects, or in
projects where international consultants participate, the
Civil Engineer performing similar or equivalent work,
should accept compensation that approximates the
international standard rates.(see Sec. 6.1.1 of the NEDA
Guidelines)
2. Civil Engineers regularly employed in the private sector shall
have a minimum compensation corresponding to 10%
more than the minimum wage prevailing in the region as basic
monthly salary. Civil Engineers employed in
the government sector shall have a minimum basic monthly
salary corresponding to appropriate entry positions
provided by the Civil Service Commission.
3. A Civil Engineer employed in the private sector who signs
and seals the Civil Engineering plans, specification
and other related documents of a certain project for
and in behalf of his employers shall be compensated
with a minimum of 10% of the professional fee
for the project, over and above the basic monthly salary.
TOTAL PROJECT
COST
The probable total capital cost, often used to
establish budgets for a typical project, is made of:

Professional engineering costs.

Construction cost.
Legal and land costs.
Owners cost, including project
administration, staffing, financing and
overhead.
Contingency allowance for unknowns.
Professional Engineering Cost
A civil engineer is often engaged to make a
study and to render a planning report on the
contemplated project including alternative
solutions, layouts, and locations along with initial
estimates of the probable project cost. This may
involve alternative or phase implementation
schemes which add flexibility to the project.
 Construction Cost
Is the estimated total cost of constructing the facility
to be covered by the proposed detailed design or
construction supervision services, excluding the fess
and other costs of such services, the cost of land
and right of way, and legal administrative expenses
of the agency.
The estimated construction cost must be approved
by the client before the invitation to submit
technical proposal is issued.
 Legal, Land, Administration, Staffing
and Financial Costs

These costs which include audits, the cost of

issuing bonds, land costs, and interest for
borrowed money during construction, are part
of the probable total project cost and can be
estimated in cooperation with the client
because they are usually outside the knowledge
and control of the Civil Engineer.
 Contingency Allowance

To provide for intangible costs, contingencies

should routinely be added to the basic cost
estimate. It is common practice to add 20% or
more to the estimated probable total project cost
at the completion of the study end report phase,
reducing this to perhaps 10% at the completion of
the final design and perhaps to 5% when the
construction bids become known. Larger or more
complex may require higher contingencies.
Thank You…
 Quiz:
1. . It is common practice to add 20% or more to the estimated probable total project cost at the
completion of the study end report phase, reducing this to perhaps 10% at the completion of
the final design and perhaps to 5% when the construction bids become known.
2. It is the estimated total cost of constructing the facility to be covered by the proposed detailed
design or construction supervision services, excluding the fess and other costs of such services,
the cost of land and right of way, and legal administrative expenses of the agency.
3. This may involve alternative or phase implementation schemes which add flexibility to the
project.
4. These costs which include audits, the cost of issuing bonds, land costs, and interest for borrowed
money during construction, are part of the probable total project cost and can be estimated in
cooperation with the client because they are usually outside the knowledge and control of the
Civil Engineer.
1. Contingency Allowance
2. Construction Cost
3. Professional Engineering Cost
4. Legal, Land, Administration, Staffing and Financial Costs,